Share Capital Transactions Subsequent to Original Issuance

E 10-1
1.a Ordinary Share Capital (2,000 sh x P50) 100,000
Ordinary Share Premium (2,000 sh x P20) 40,000
Paid-In Capital from Retirement of OSC 50,000
Cash (2,000 sh x P45) 90,000

b Ordinary Share Capital 100,000

Ordinary Share Premium 40,000
Paid-In Capital from Retirement of OSC 20,000
Cash (2,000 sh x P60) 120,000

2. 200,000 – 2,000 = 198,000 shares issued and outstanding

E 10 -2
1. Treasury Shares (5,000 sh x P20) 100,000
Cash 100,000

Retained Earnings 100,000

Retained Earnings Appropriated for Treasury Shares 100,000

Cash (3,500 sh x P35) 122,500

Treasury Shares (3,500 x P20) 70,000
Paid-In Capital from Sale of Treasury Shares 52,500

Retained Earnings Appropriated for Treasury Shares 70,000

Retained Earnings 70,000

SHAREHOLDERS’ EQUITY
2. Contributed Capital:
Ordinary Share Capital, P25 par, 100,000 shares issued,
98,500 shares outstanding, 1,500 shares in the treasury P2,500,000
Ordinary Share Premium 1,000,000
Paid-in Capital from Sale of Treasury Shares 52,500 P3,552,500
Retained Earnings:
Retained Earnings Appropriated for Treasury Shares P 30,000
Unappropriated Retained Earnings 1,470,000 1,500,000
Total Contributed Capital and Retained Earnings P5,052,500
Less Treasury Shares, at cost - 1,500 shares 30,000
Total Shareholders’ Equity P5,022,500

E 10-3
1. Alternative 1
a. Received 5,000 ordinary shares as donation from a major shareholder

b. Cash 250,000
Donated Capital 250,000
5,000 shares x P50
APC – Chapter 10 (2014 edition) page 2

Alternative 2
a. Treasury Shares 200,000
Donated Capital 200,000

b. Cash 250,000
Treasury Shares 200,000
PIC from Sale of Treasury Shares (or Donated Capital) 50,000

2. after the after the sale

donation of the don shs
Issued 150,000 shs 150,000shs
Outstanding 145,000 shs 150,000shs

E 10-4
1.a Preference Share Capital (3,000 sh x P50) 150,000
Preference Share Premium (3,000 sh x P25) 75,000
PIC from Conversion of PSC into OSC 105,000
Ordinary Share Capital (3,000 sh x 4 x P10) 120,000

b Preference Share Capital (3,000 sh x P50) 150,000

Preference Share Premium 75,000
Retained Earnings 75,000
Ordinary Share Capital (3,000 sh x 10 x P10) 300,000

c Preference Share Capital (3,000 sh x P50) 150,000

Preference Share Premium 75,000
Retained Earnings 15,000
Ordinary Share Capital (3,000 sh x 8 x P10) 240,000

2.a Issued and outstanding PS 47,000 OS 112,000

b PS 47,000 OS 130,000
c PS 47,000 OS 124,000

E 10-5
1.a Ordinary Share Capital, P20 par 1,000,000
Ordinary Share Capital, P4 par 1,000,000

b Ordinary Share Capital, P20 par 1,000,000

Ordinary Share Capital, P80 par 1,000,000

c Ordinary Share Capital, P20 par 1,000,000

Ordinary Share Premium 200,000
Ordinary Share Capital, P15 par (50,000 sh x P15) 750,000
Paid-In Capital from Reduction in Par Value of OSC 450,000

NOTE: ….. in exchange for one ordinary share with a par value of P20 instead of P25
APC – Chapter 10 (2014 edition) page 3

d Ordinary Share Capital, P20 par 1,000,000

Ordinary Share Premium 200,000
Ordinary Share Capital, P20 stated value 1,000,000
PIC from Exchange of Par for No-Par Share Capital 200,000
NOTE: …..one new ordinary share with a stated value of P20 in exchange for one
ordinary share with a par value of P20

2. a 20,000 x 5 = 100,000 shares c. 20,000 shares

b 20,000/4 = 5,000 shares d. 20,000 shares

E 10-6
1.a Treasury Shares (5,000 shares x P10) 50,000
Cash 50,000

Retained Earnings 50,000

Retained Earnings Appropriated for Treasury Shares 50,000

Cash (4,000 x P12) 48,000

PIC from Sale of Treasury Shares 8,000
Treasury Shares (4,000 x P10) 40,000

Retained Earnings Appropriated for treasury Shares 40,000

Retained Earnings 40,000

Cash (1,000x P7) 7,000

PIC from Sale of Treasury Shares 3,000
Treasury Shares (1,000 x P10) 10,000

Retained Earnings Appropriated for Treasury Shares 10,000

Retained Earnings 10,000

b. Preference Share Capital (1,000x P100) 100,000

Preference Share Premium 20,000
PIC from Conversion of PSC into OSC 70,000
Ordinary Share Capital (1,000 x 10 x P5) 50,000

2. Issued and Outstanding PS 9,000 shs OS 510,000 shs

P 10 -1
1.a PSC Subscription Receivable (10,000 sh x P125) 1,250,000
OSC Subscription Receivable (20,000 sh x P60) 1,200,000
PSC Subscribed (10,000 sh x P100) 1,000,000
OSC Subscribed (20,000 sh x P50) 1,000,000
Preference Share Premium 250,000
Ordinary Share Premium 200,000
APC – Chapter 10 (2014 edition) page 4

Cash 1,225,000
PSC Subscription Receivable (P1,250,000 x 50%) 625,000
OSC Subscription Receivable (1,200,000 x 50%) 600,000

b. Cash 1,225,000
PSC Subscription Receivable 625,000
OSC Subscription Receivable 600,000

PSC Subscribed 1,000,000

OSC Subscribed 1,000,000
Preference Share Capital 1,000,000
Ordinary Share Capital 1,000,000

c. Treasury Shares - Ordinary Share Capital (2,500 sh x P50) 125,000

Cash 125,000

d. Preference Share Capital (3,000 sh x P100) 300,000

Preference Share Premium (3,000 x P25) 75,000
Ordinary Share Capital (3,000 sh x P50) 150,000
PIC from Conversion of PSC into OSC 225,000

e. Cash (1,500 sh x P65) 97,500

Treasury Shares (1,500 sh x P50) 75,000
PIC from Sale of Treasury Shares 22,500

f. Received 2,000 ordinary shares as donation from a major shareholder

g. Cash (2,000 x P56) 112,000

Donated Capital 112,000

h. Cash (1,000 sh x P60) 60,000

Treasury Shares (1,000 sh x P50) 50,000
PIC from Sale of Treasury Shares 10,000

i. Ordinary Share Capital, P50 par (23,000 x P50) 1,150,000

Ordinary Share Premium 200,000
Ordinary Share Capital, P30 stated value (23,000 sh x P30) 690,000
PIC from Exchange of Par for No-Par Shares 660,000

j. Income Summary 1,500,000

Retained Earnings 1,500,000

k. Retained Earnings 93,000

Dividends Payable 93,000
PS = 7,000 sh x P100 x 10% = P70,000
CS = 23,000 sh x P1 = 23,000
APC – Chapter 10 (2014 edition) page 5

2. SHAREHOLDERS’ EQUITY
Contributed Capital:
Share Capital:
10% Preference Share Capital, P100 par, 20,000 shares
authorized, 7,000 shares issued and outstanding P700,000
Ordinary Share Capital, P30 stated value, 50,000 shares
authorized, 23,000 shares issued and outstanding 690,000 P1,390,000
Additional Paid-in Capital:
Preference share Premium P175,000
Paid-in Capital from Exchange of Par for No-Par Shares 660,000
Paid-in Capital from Sale of Treasury Shares 32,500
Paid-in Capital from Conversion of PSC into OSC 225,000
Donated Capital 112,000 1,204,500
Total Contributed Capital P2,594,500
Retained Earnings 1,407,000
Total Shareholders’ Equity P4,001,500

P 10-2
Requirement 1
a. Treasury Shares – Ordinary SC (5,000 sh x P16) 80,000
Cash 80,000
Retained Earnings 80,000
Retained Earnings Appropriated for Treasury Shares 80,000
b. Preference Share Capital (10,000 sh x P100) 1,000,000
Preference Share Premium (10,000 sh x P5) 50,000
PIC from Conversion of PSC into OSC 250,000
Ordinary Share Capital (10,000 x 4 x P20) 800,000
c. Accounts Payable 12,500
Ordinary Share Capital (500 sh x P20) 10,000
Ordinary Share Premium 2,500
d. Retained Earnings 571,000
Dividends Payable 571,000
PSC= 40,000 x P100 = P4,000,000 x 5% = P200,000
OSC = (150,000 + 40,000 + 500 – 5,000) x P2 =P371,000
e. Land 50,000
Treasury Shares (2,000 sh x P16) 32,000
PIC from Sale of Treasury Shares 18,000
Retained Earnings Appropriated for treasury Shares 32,000
Retained Earnings 32,000
f. Ordinary Share Capital, P20 par(150,000 + 40,000 + 500) x P20 3,810,000
Ordinary Share Capital, P10 par 3,810,000
g. Income Summary 200,000
Retained Earnings 200,000
APC – Chapter 10 (2014 edition) page 6

2. SHAREHOLDERS’ EQUITY
Contributed Capital:
Share Capital:
5% Preference Share Capital, P100 par, 40,000 shares
issued and outstanding P4,000,000
Ordinary Share Capital, P10 par, 381,000 shares issued,
378,000 shares outstanding, 3,000 shares in treasury 3,810,000 P 7,810,000
Additional Paid-in Capital:
Preference Share Premium P 200,000
Ordinary Share Premium 752,500
Paid-in Capital from Sale of Treasury Shares 18,000
Paid-in Capital from Conversion of PSC into OSC 250,000 1,220,500
Total Contributed Capital P 9,030,500
Retained Earnings:
Retained Earnings Appropriated for treasury Shares P 48,000
Unappropriated Retained Earnings 1,081,000 1,129,000
Total Contributed Capital and Retained Earnings P10,159,500
Less Treasury Shares at Cost (3,000 shares) 48,000
Total Shareholders’ Equity P10,111,500

P 10 – 3
SHAREHOLDERS’ EQUITY
Contributed Capital:
Share Capital:
10% Preference Share Capital, P50 par, 115,000
shares issued and outstanding P 5,750,000
Ordinary Share Capital, P5 par, 2,050,000 shares
issued, including 5,000 shares in the treasury 10,250,000 P16,000,000
Additional paid-in capital:
Preference Share Premium P 1,150,000
Ordinary Share Premium 5,375,000
Paid-in Capital from Sale of Treasury Shares 30,000 6,555,000
Total Contributed Capital P22,555,000
Retained Earnings:
Retained Earnings Appropriated for Treasury Shares P 70,000
Unappropriated Retained Earnings 4,310,000 4,380,000
Total Contributed Capital and Retained Earnings P26,935,000
Less Treasury Shares, at cost (5,000 shares) 70,000
Total Shareholders’ Equity P26,865,000
*A work sheet may be prepared to facilitate computation of the above balances.

Problem 10 – 4
Assets Liabilities SE APIC RE Profit
1. D NE D NE NE NE
2. I NE I I NE NE
3. I NE I D* NE* NE
I NE I NE* D* NE
4. NE NE NE D D NE
APC – Chapter 10 (2014 edition) page 7

*The indicated loss may be debited to the APIC arising from sale of the treasury Share Capital in No. 2
or such indicated loss may be debited to retained earnings.

P 10-5
Javier Company
Statement of Changes in Shareholders’ Equity
For the Fiscal Year Ended June 30, 2014

PS OS APIC RE TS
Balances, June 30, 2013 P3,000,000 P1,000,000 P 9,200,000 P2,550,000
Issuance of 5,000 PSC @ P140 500,000 200,000
Issuance of 20,000 OSC @ P70 200,000 1,200,000
Retirement of 1,000 PSC @ P150 ( 100,000) ( 40,000) ( 10,000)
Purchase of 5,000 TS @ P80 P400,000
Share split of 2 for 1
Reissuance of TS @ P52 60,000 ( 200,000)
Declaration of dividends
PSC = P3,400,000 x 10% ( 340,000)
OSC = 235,000 x P6 ( 1,410,000)
Profit for the year 750,000
Balances, June 30, 2014 P3,400,000 P1,200,000 P10,620,000 P1,540,000 P200,000

MULTIPLE CHOICE

MC10-1 A Total profit since incorporation P 420,000

Total cash dividends paid ( 130,000)
Total value of share capital dividends distributed ( 30,000)
Retained earnings, end P 260,000

MC10-2 B 1/7 - 40,000 sh x P12 P 480,000

12/2 - 6,000 sh x P13 ( 78,000)
12/31- Profit for the year 300,000
Total shareholders’ equity, 12/31/14 P 702,000

MC10-3 B P15 par x 2 = P30 ¸ 5 P6.00

MC10-4 C 200,000 sh ¸ 2 = 100,000 sh x P5 500,000 shs

MC10-5 A 15,000 sh x 3 x p25 P1,125,000

MC10-6 A 1/1/12 - 100,000 sh x P15 P1,500,000

2012– 2014 - Profit 450,000
- Cash dividends ( 230,000)
1/10/14 - Treasury Shares (6,000 sh x P12) ( 72,000)
11/20/12 - Reissue of Treasury Shares (4,000 sh x P8) 32,000
Total shareholders’ equity P1,680,000

MC10-7 B 4,000 shares x P4 = P16,000

MC10-8 A Proceeds from sale of treasury Share Capital P 210,000

Cost of treasury Share Capital 120,000
Paid-in capital from sale of treasury Share Capital P 90,000
APC – Chapter 10 (2014 edition) page 8

MC10-9 B (100,000 +10,000) x 2 = 220,000 – [(5,000 – 1,000) x 2] = 212,000

MC10-10 B (40,000 x P105) – (600 x P110) + (400 x P95) + P830,000 – P200,000 = P4,802,000

TM 39
1. T 6. T 11. T 16. F
2. F 7. T 12. T 17. F
3. F 8. T 13. F 18. T
4. F 9. F 14. F 19. T
5. F 10. T 15. T 20. F

TM 40
1. Treasury shares
2. Convertible preference shares
3. Stock or share split / share split-up
4. Recapitalization
5. Paid-in Capital from Retirement of Share Capital
6. Cost method
7. Share split down / reverse share split
8. Retained Earnings
9. Decrease
10. Retained Appropriated for Treasury shares
11. Memorandum entry
12. Selling price
13. Contributed Capital
14. Reacquisition by donation
15. Retirement of share capital

TM 41
1. D
2, C
3. D
4. A
5. B
6. A
7. D
8. C
9. C
10. D
11. A 6,000 x P20 = P120,000 (same as before the Share Capital split)
12. A
13. C 20,000 x P30 = P600,000
14. B
15. B Authorized - 10,000; Issued - 4,400; Outstanding - 4,400 - 500 = 3,900
16. A Authorized - 10,000 x 2 = 20,000; Issued - (4,400 + 100) x 2 = 9,000;
Outstanding - (4,400 - 500 + 100) x 2 = 8,000
17. A P1,650,000 - (1,000 shares x P40) = P1,610,000
18. C 100,000 shares x P30 = P3,000,000

NOTE: 2010 should be 2014

APC – Chapter 10 (2014 edition) page 9

19. B (100,000 sh x P50) + (5,000 sh x P20) - (15,000 sh x P15) = P4,875,000

20. B 100,000 shares x 3 - 300,000 shares - 15,000 shares = 285,000 shares

TM 42
Problem A:
Outstanding Ordinary Add'l Paid-In Retained
Shares Share Capital Capital Earnings TSE
1. 230,000 P 4,600,000 P1,350,000 P4,650,000 P10,600,000
2. 400,000 4,000,000 1,200,000 5,400,000 10,600,000
3. 400,000 8,000,000 1,200,000 1,400,000 10,600,000
4. 200,000 3,000,000 2,200,000 5,400,000 10,600,000
5. 195,000 3,900,000 1,180,000 5,400,000 10,480,000

TM 43
a. Preference Share Capital (500 sh x P100) 50,000
Preference Share Premium (500 sh x P20) 10,000
Paid-In Capital from Retirement of PSC 2,500
Cash (500 sh x P115) 57,500

PSC 3,500 shs OSC 10,000 shs

b. Treasury Shares (1,000 sh x P25) 25,000

Cash 25,000

Cash 28,000
Treasury Shares 25,000
Paid-In Capital from Sale of Treasury Shares 3,000

PSC 4,000 shs OSC 10,000 shs

c. Preference Share Capital (1,000 sh x P100) 100,000

Preference Share Premium (1,000 sh x P20) 20,000
Ordinary Share Capital (1,000 sh x 4 x P20) 80,000
PIC from Conversion of PSC into OSC 40,000

PSC 3,000 shs OSC 14,000 shs

d. Ordinary Share Capital, P20 par 200,000

Ordinary Share Capital, P5 par 200,000
PSC 4,000 shs OSC 40,000 shs